Resolutions for Keeps – Personal Financial Planning for the Home

Do you know anyone who would drive their car for more than a few days with a broken fuel gauge?

Unless that person enjoys taking the risk of being stranded and hiking to the nearest gas station…

What do we want our last known address to be?

A while back when I owned a van its speedometer cable became disconnected. Until it was fixed it was difficult to know whether I was speeding. During that time my perspective on driving changed considerably.

So what does any of the above have to do with the topic that pushes people to spend years in school, days working and worrying, and is a principal cause of divorce and crime? How do car stories relate to the means that allow us fun and to do good for others? Does Cindy have auld lang syne hangover?

So what do money and broken fuel gauges have in common? It has to do with that scorned and ignored word prevention. The idea of prevention is so quaint and old fashioned it is not even on peoples’ radar screens.

Of course 99% of people would get their fuel gauge repaired As Soon As Possible. It is not a fun feeling to be totally clueless as to how much gas is left in your tank.

The same cannot be said for our paycheques. It is unlikely that 99% of wage earners figure out how much they spend each month. In fact in enough instances to make it statistically significant Canadians spend more than what they earn. They go past E on the fuel gauge. They are the credit card companies favorite target.

How is this true? Statistics Canada shows that Canadians personal wealth has increased but not as fast as their debt.(2) On the Internet, the site with the most amount of hits is a refinancing site, according to CTV Newsnet on December 20. 2006. (3) According to Chicago magazine 14% of Americans were still paying off credit card debt from the 2004 holiday season one year later.

The current topic for financial planners is something called best practices. The best practices concept is defined as an action a planner takes to achieve maximum productivity or better results. It is an ongoing process. An example of best practices for a financial planner is refining modes of communication.

So what does this have to do with you and your money? Has Cindy started the New Year going on rabbit trails?

What about applying best practices in your financial life? You already do it in other areas. For example all of you lock your car or house doors. Why not do the same for your money? Again that outdated word prevention comes to mind here. Prevention is a best practice! That’s why all of you safeguard your PIN numbers on your bank cards for example.

As I have said in previous issues a budget( drums of doom please) is NOT as important as knowing how or what you are spending your wages on. Issue 13 exactly one year ago gave readers a tool to track their spending.
Keeping track is especially important if a person or family has long term goals, or in other words do you care about your last known address?

Suffice to say that the consequences of unproductive decisions in managing your money take a long time to add up to a negative outcome.
Let's play the game show host for a minute: Which will you choose?
Door #1 a $30 oil change
Door #2 a $2000 engine repair
Door #3 2 pieces of cake
Door #4 a 30 minute walk or run

Which will you choose? A few hours a year mapping out your finances or a future dependent on the good will of banks and government?

Let’s conclude with a couple acrostics:

Prevention Learn Action New perspective so that you don’t have

Dead End Bad Times

Periodically
Review
Expectations and progress towards your goals
Vow to avoid quick fixes
Evaluate all your
fiNancial decisions and understand they are interrelated
Take time to
Increase
Opportunities to be
fiNancially prepared for all life events
Financial planners are often asked who their favorite clients are. Contrary to popular belief, their favorites are NOT who has the most assets, or who gives them the most business. The clients who planners value the most are those who do two things:

1. Keep the lines of communication going BOTH ways. If the planner calls, reply as quickly as you would like him or her to return YOUR call/email. It is ALWAYS important to your financial future when your planner contacts you. When I mentioned improving communication a few paragraphs ago, part of best practices is keeping dates of the times I have phoned or emailed a client and also deciding the maximum number of contacts I will make if there is no reply.

2. Are committed to their financial well being and prove that commitment by taking the necessary actions to accomplish that goal.

The responses from the last newsletter were all beefs and very legitimate one at that. One reader questioned why people are not advocating for lower income taxes being that governments are in a position to give tax relief. Well maybe this statistic will get you thinking. The top expenditure in any household is personal income taxes, followed by shelter, and transportation. These three obligations make up over 50% of the expenditures for households in Alberta. (4)

1. Calgary Herald November 2006
2. Statistics Canada online Survey of Financial Security Dec 2006
3. CTV Newsnet
4. Statistics Canada online Cansim Summary Table Dec 2006

[tags]canadian finances, personal finances, financial resolutions, financial planning[/tags]

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